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Cummins CEOs turned to Gerstle to overcome challenges

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Mark Gerstle stands for applause after he was recognized at the Cummins-DaimlerChrysler announcement. A receptive crowd of hundreds gathered Wednesday October 11, 2006, at Plant One in Columbus, Ind. for the announcement that Cummins, Inc. will build light-duty diesel engines there for DaimlerChrysler.
Mark Gerstle stands for applause after he was recognized at the Cummins-DaimlerChrysler announcement. A receptive crowd of hundreds gathered Wednesday October 11, 2006, at Plant One in Columbus, Ind. for the announcement that Cummins, Inc. will build light-duty diesel engines there for DaimlerChrysler.

Cummins Inc.’s two most recently retired chief executives said that whenever the company faced tough challenges that required good judgment and had to be addressed promptly and correctly, they sought out Mark Gerstle.

From revamping the Fortune 500 company’s risk management guidelines to organizing a board of directors’ trip to India to rebuking hostile takeover attempts, Gerstle got it done.

“If you ... needed something done, Mark was a guy you could turn to,” said Jim Henderson, who served as Cummins CEO from 1994 to his retirement in late 1999.

Tim Solso, who succeeded Henderson and retired just more than a year ago, agreed.

“Mark was always my go-to guy,” he said.

Both former CEOs said Gerstle played a critical role in many of the company’s achievements in the past 20-plus years.

In the late 1980s, Gerstle played a key part in thwarting two hostile takeover attempts, Henderson said.

In both cases, the companies said that if they took control of Cummins, they planned to break the company apart and sell its pieces.

“That was a clear danger,” Henderson said.

Gerstle was part of the team with then-CEO Henry Schacht who led tough negotiations. Gerstle had to thoroughly study all kinds of laws, including state and securities laws, and helped the company charge in court that one of the companies that was trying to take control of Cummins had violated securities and racketeering laws.

“He was sort of the quarterback,” Henderson said.

In 1995, the company decided to take the board of directors, including spouses, to India, which proved challenging from a logistical perspective, Henderson said.

“Those are disasters waiting to happen, in some ways,” Henderson said.

The trip included plant visits, evening functions with customers, briefings with government personnel and a meeting with the Indian prime minister.

One of the planes in India could not take off, Henderson said, and it fell to Gerstel to organize a different plane. At the same time, he had to keep the board and spouses happy despite temperatures topping 118 degrees. Gerstle would be the first to praise his whole team, Henderson said, but he put the team together, and the board looked to him to get things done.

The trip proved successful, Henderson said, as it reinforced to the board the importance of the Indian market. It also sent a strong message to customers and the Indian government that Cummins placed a high value on its business in India.

Gerstle’s colleague, Rich Freeland, said Gerstle’s work on the company’s risk management processes played a big part in preparing the company for potential challenges and the company’s repeated recognition for sustainability.

Freeland, president of the Engine Business, said companies such as Cummins try to identify risks that might affect its operations. These risks could range from how the company responds to a tornado interrupting the supply chain to someone developing new propulsion technology that makes diesel less competitive to the price of oil reaching $200 a barrel or China suffering from social unrest.

Gerstle created a way to identify the risks, how to respond to them and how to minimize their impact. He interviewed people in various business groups about the things they worried about, he interviewed board members and brought in experts in science and technology. He then used a data-driven tool to analyze the biggest risks and assigned employees to figure out how to best respond.

Cummins has been named to the Dow Jones Sustainability World Index for eight consecutive years. The index assesses companies in areas including climate change mitigation, philanthropy and risk management.

Solso said that Gerstle’s work to revamp the company’s risk management process was one of the most important things the company did in Solso’s final five years as CEO.

Freeland said that beyond reducing the company’s exposure to risks, Gerstle also used the work to develop young talent by involving employees from various disciplines in big-picture thinking.

Gerstle developed a reputation within Cummins for his dedication to mentoring young, bright employees so that many new employees wanted to work for him, Solso said.

Gerstle joked recently that he had so many roles within Cummins because he easily gets bored.

Solso laughed when he heard that, and said that may have been partially true.

“He’s an incredibly smart guy, and he’s a high-energy guy,” Solso said. “He needs to be fully engaged.”

However, Solso said Gerstle could be counted upon to handle any situation quickly and properly.

“That’s the reason he wore different hats,” the former CEO said. “He never failed at anything that I asked him to do.”

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